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Regulatory Update for August 2011

While the summer is usually considered a quiet, sleepy time, it has been anything but that for the hearth industry and HPBA this year. This update covers recent developments on three issues of critical importance for the future of the hearth industry: (1) the U.S. Department of Energy’s regulations on efficiency of gas fireplaces and log sets, (2) the U.S. Consumer Product Safety Commission’s request for comments on barriers for glass fronts in gas fireplaces, and (3) the U.S. Environmental Protection Agency’s developing air pollution regulations for new wood-burning appliances.

1. Gas Appliances: Department of Energy Regulations

In April 2010, the U.S. Department of Energy (DOE) issued regulations governing energy efficiency for “room heaters,” which covered all gas fireplaces with an input of at least 9,000 Btu/hr. The regulation included decorative and heater-rated vented gas fireplaces; however, gas log sets were not included based on a letter received from DOE. The regulation was a surprise because at no time during the development of the rule did DOE state that it was considering the regulation of decorative gas fireplaces – something that it must do, under federal law. Simply put, by short-circuiting the process, DOE denied the industry its rights.

HPBA hired Barton Day, an attorney specializing in administrative law, and sued DOE in the D.C. Circuit Court of Appeals. Settlement negotiations went on for a year. While there was agreement between DOE and HPBA on what the industry would have to do to get decorative gas fireplaces out of the rule (i.e., the substantive provisions), DOE was unwilling to negotiate on how it wanted to implement the agreement – thus leaving the industry with no assurances that DOE would not override the agreement with new, onerous standards shortly after the agreement went into effect. Simply put, DOE would not remove decorative gas appliances from being considered as Direct Heating Equipment (DHE), thereby forcing a non-heating device to meet heating efficiency standards. We had no meaningful agreement and no choice but to reject DOE’s offer.

During negotiations, the court case was put on hold. With negotiations at an impasse, we went back to the court and asked it to put the case back on the calendar. We did this because we need to get a decision from the court early enough to give our industry sufficient time to comply with whatever requirements we would have to meet.

Our motion to the court was opposed by DOE, which stated that it had a new proposed regulation that would eliminate the issues before the court. This proposed rule, a total surprise to the HPBA negotiating team, included the substantive provisions for decorative gas fireplaces agreed to during the negotiations. But it also included essentially the same requirements for gas log sets, even though, all through the negotiations, DOE agreed that gas log sets – and their being excluded from the regulation – were not an issue for discussion. And the core issue of concern to HPBA – removing decorative appliances from the DHE category – was ignored by DOE by keeping decorative gas listed as DHE.

A hearing on the new proposal has been scheduled by DOE for September 1st in Washington, D.C., and comments on the proposed rule are due to DOE on September 20th. DOE also said that the regulation was on a fast track, and would be made final by November of this year.

The new proposal – and the statement to the court that it need not consider our lawsuit on the original rule – represent further bad faith by DOE. First, it is bringing an entirely new product category into the mix, despite earlier statements that the category was not included. Second, it is now trying to deny the industry’s rights – this time in court.

As a result of these recent developments, HPBA must now fight a multi-front war to protect the industry. We must continue our litigation on the original rule, since a victory for the industry may throw out both the first rule and the new proposal – and if we don’t continue, we may waive our rights to get provisions of the original rule overturned. We must also aggressively confront DOE on its new proposal, both at the hearing and in comments. And we must be prepared to challenge a new final rule in court, if necessary.

The other major front in this war – and possibly now the primary front – is on Capitol Hill. The source of the regulatory power of any administration generally comes from the statutes enacted by the U.S. Congress that give any department, agency or other similar body the directions of what to do and the power to do it. And, when an administrative body acts in an arbitrary and capricious manner, like the Department of Energy, the U.S. Congress can be petitioned by its citizens to correct the injustice. That is precisely what the HPBA staff is now doing: we are taking our campaign to Capitol Hill, visiting with targeted Members of Congress in both the Senate and the House of Representatives, to explain to them our problem with DOE, and asking for Congress’s assistance in resolving it.

First, we can report that our presentations have been unanimously met with awe, disbelief and support: congressional offices cannot believe what DOE is attempting to do and why the agency would want to do it. They recognize that we have a valid – and more importantly, correct – reason for asking Congress for assistance. A question frequently asked of HPBA by both congressional staff and our own members is why did we wait so long to go to the U.S. Congress for relief? The answer is simple: you do not petition the Congress for relief until, and only after, you have exhausted all other reasonable means available to you. Making this point to Congress – that we have spent over a year negotiating with DOE and have nothing to show for it but the same category-killing regulation that started this whole process – has won us additional support for our cause.

The goal for our lobbying effort is to remove decorative vented gas products (fireplaces and log sets) from any connection to DHE and to give that category its own definition as non-DHE decorative gas appliances. We have just begun our effort and will not know the success of our lobbying campaign for a few more months. Lobbying is a very long, time consuming, process (which is another reason we did not begin until now) where promises occur much faster than results.

You may get a call from HPBA to help us in this effort. We may ask you to call, email or visit your own Members of Congress. We will only ask you if we think that it will be beneficial to the cause. A grassroots campaign can be extremely beneficial.

HPBA will continue to fight to protect the hearth industry from the unwarranted attack by DOE. And, we will also continue to give you updates.

On June 8th, the U.S. Consumer Product Safety Commission (CPSC) published a request for comments on two petitions that it received that requested the regulation of glass fronts on gas fireplaces. One petition, citing two thousand serious burns over a ten-year period, requested regulations making barriers mandatory. The other requested the use of an LED-based warning system that the petitioner invented.

Several years before these petitions were filed, HPBA had created and distributed a consumer brochure to alert consumers of the possible burn hazards of glass fronts. The brochure can be viewed on HPBA’s website at www.hpba.org/staysafe. In addition, CSA, the organization that issues safety standards for gas fireplaces, had convened a Working Group to consider what further safety measures were warranted to protect people – especially young children – from burns on glass fronts. The group started meeting in July, 2010, and has since met in May and August, 2011, with another meeting scheduled in September. CPSC has also been pressured to act from Senator Al Franken of Minnesota, who wrote a letter asking why CPSC had not already acted on this issue. Finally, there have been at least two product liability cases filed against members of the industry, citing the hazards of glass fronts.

In response to the CPSC request for comment, HPBA hired an attorney, Chuck Samuels, who specializes in CPSC cases and, with his help, organized industry meetings to forge a position. He then prepared comments for HPBA to submit to CPSC. The comments from HPBA, http://www.hpba.org/members/news-updates/glass-fronts, were submitted on August 8th. Several member companies also submitted comments.

HPBA’s comments had two main points. First, the comments pointed to the Consumer Product Safety Act (CPSA), which requires the CPSC to rely on voluntary standards, instead of regulations, whenever possible. We said that the CSA Working Group – which includes a CPSC representative – has already been working aggressively on the problem, and that formal changes to CSA’s Z21.50 and Z21.88 standards are being expedited. As a result, under the CPSA, the CPSC need not regulate the industry, but should defer to the voluntary industry standard.

Second, HPBA said that it is developing a more aggressive education program to continually educate the public on the possible burn hazards from glass fronts. We also included an outline of what such an education plan could look like.

It’s hard to predict the CPSC’s final decision – or when it will be issued – but we certainly hope that the commission will defer to the CSA Working Group and approve HPBA’s education plan. HPBA staff will also be planning next steps with Chuck Samuels.

The U.S. Environmental Protection Agency's (EPA) New Source Performance Standards (NSPS) for New Residential Wood Heaters, also known as the "EPA wood stove certification program,” is the 1988 program that governs emissions for wood-burning appliances and controls the sale and import of wood stoves. In late 2008, EPA began the first revision of the NSPS in 20 years.

The NSPS revisions will impact all wood-burning appliances, expanding the program to include more types of wood-burning appliances than just wood stoves (e.g., pellet stoves, outdoor hydronic heaters, outdoor decorative appliances, masonry heaters, etc.).

The timetable for EPA’s completion of the NSPS has been altered several times, with the latest “soft” targets of early 2012 for the Notice of Proposed Rulemaking or “NOPR" (i.e., the first draft offering by EPA), a comment period to run through 2012, and a Final Rule published in the Federal Register (the official document for federal regulations) in mid-2013. These dates are not firm and subject to change at any time.

The NSPS review continues to involve many difficult technical issues, although much of the work is taking place in private or sidebar conversations. States in the Northeast and the Northwest, represented by their regional organizations, continue to generate new issues and ideas, which require EPA, and consequently HPBA, to respond. HPBA continues to quantitatively and qualitatively demonstrate that the EPA-proposed emissions limits would severely harm the solid-fuel industry. With the inclusion of more products – pellet stoves, fireplaces, masonry heaters, etc. – members will be struggling to survive through extraordinary R&D costs on formerly exempt products. There are also continuing discussions on compliance timelines, testing procedures and variability, category definitions, emissions targets, economic impacts and the future of the EPA voluntary programs.

As always, there are substantial expenses involved in such massive efforts. The staff ofHPBA extends its sincerest "thank you" to the many members and affiliates who have contributed hundreds of volunteer hours and thousands of dollars in financial support to help fight these industry-threatening battles. We will continue to protect the best interests of the industry, and we are grateful to have the support and opportunity to collaborate with so many great people.